Dinsmore v. Duncan , 4 Daly 199 ( 1871 )

By the Court.^*—Robinson, J.

—This action is brought for the alleged conversion of a seven-thirty note of the United States, issued under the act of Congress of March 3, 1865"(13 U. S. Statutes at Large, 468), which, when held by the First National Bank of New Albany, Indiana, under whom plaintiffs assert title, was substantially in this form :

“ $1,000. Three years after date

The United States promise to pay to the order of

One thousand dollars, with interest at 7T3T per cent., payable-

semi-annually in lawful money.”

(Signed by the proper officers of the Treasury.)

It was, on the 22d of May, 1868, entrusted by that bank to plaintiffs (common carriers), for remittance to Washington for conversion into five-twenty bonds, as allowed by that act, being endorsed by the cashier, “ Pay to the bearer (printed), Secretary of the Treasury, for conversion. W. Mann, Cash.” The package containing this note, in course of transportation, was, on the night of May 22d, 1868, stolen from the plaintiffs and taken to Liverpool, England, where, on the .25th day of June, 1868, the endorsement having been obliterated or extracted by some chemical process, so that it could not be observed, it was, in good faith and for full value, purchased by the firm of L. Bemas & Sons, bankers, who, on the 26th, remitted it to the defendants, bankers, and their correspondents in New York, for conversion. The defendants sent the full value of the note to Bemas & Sons, on July 8, 1868, without notice affecting the validity of their title, and they subsequently converted it by accepting substituted security, in conformity to the provisions-of the act of 1865,

The note, although issued by the United States Government, was subject to the common law rule applicable to commercial paper (Murray v. Lardner, 2 Wall. 118 ; Thompson v. Lee, 3 Ib. 327; Texas v. White, 7 Ib. 700). As issued, no payee being named,-it was payable to any bona fide bolder before maturity. The payee’s name being in blank, he could insert his own name or that of any other person (Cruchley v. Clarance, 2 M. & S. 90). But until such restriction was placed upon the negotiability of the instrument, it continued an obligation through the law merchant, payable to any one who, in good faith and before maturity, became its holder. Endorsements or other minutes on its back or otherwise, so long as they continued apparent, operated at most by way of notice or of guaranty, but otherwise in no way interfered with the negotiability of the instrument, which, until its restriction by the insertion of the name of a payee, continued payable to bearer (Birdsall v. Russell, 29 N. Y. 227). Defendant’s title to the note was in no way acquired through any endorsement of the First National Bank of New Albany, and was in no way affected by any obliteration •or forgery of the endorsement made by W. Mann, their cashier.

For these reasons judgment should be given in defendants’ favor.

Judgment for defendants.

* Present, Daly, Oh. J., Robinson, and Larremorb, JJ.